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Oligopoly Power and Allocative Efficiency in US Food and Tobacco Industries

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  • Sanjib Bhuyan
  • Rigoberto A. Lopez

Abstract

This paper computed oligopoly‐induced allocative efficiency losses in 38 US food and tobacco manufacturing industries using conduct, demand and cost parameters estimated with a New Empirical Industrial Organisation (NEIO) approach. Allocative efficiency loss estimates in these industries amounted to $15.2 billion or over five per cent of sales for 1987. Statistical tests showed that these losses are generally higher than previous estimates, possibly due to the allowance of non‐constant marginal costs and revised estimates of demand elasticities and conduct.

Suggested Citation

  • Sanjib Bhuyan & Rigoberto A. Lopez, 1998. "Oligopoly Power and Allocative Efficiency in US Food and Tobacco Industries," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(3), pages 434-442, September.
    • Handle: RePEc:bla:jageco:v:49:y:1998:i:3:p:434-442
    DOI: 10.1111/j.1477-9552.1998.tb01283.x
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    References listed on IDEAS

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    1. Rigoberto A. Lopez & Sanjib Bhuyan, 1996. "A Comparison of Oligopoly Welfare Loss Estimates for U.S. Food Manufacturing: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 706-709.
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    2. Morrison Paul, Catherine J., 2000. "Productivity And Efficiency In The U.S. Food System, Or, Might Cost Factors Support Increasing Mergers And Concentration?," Working Papers 11983, University of California, Davis, Department of Agricultural and Resource Economics.
    3. Bergtold, Jason S. & Akobundu, Eberechukwu & Peterson, Everett B., 2004. "The FAST Method: Estimating Unconditional Demand Elasticities for Processed Foods in the Presence of Fixed Effects," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(2), pages 1-20, August.
    4. Rahman, Mohammad Chhiddikur, 2020. "Welfare Impact of Asymmetric Price Transmission on Bangladesh Rice Consumers," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 242248, June.
    5. Konstantakis, Konstantinos N. & Michaelides, Panayotis G., 2017. "Technology and Business Cycles: A Schumpeterian Investigation for the USA," MPRA Paper 80636, University Library of Munich, Germany.
    6. Chen, Yuquan & Yu, Xiaohua, 2018. "Does the centralized slaughtering policy create market power for pork industry in China?," China Economic Review, Elsevier, vol. 50(C), pages 59-71.
    7. Fousekis, Panos, 2003. "Productivity Growth in the US Food and Kindred Products Industry," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 4(2), pages 1-13, August.
    8. Salhofer, Klaus & Schmid, Erwin, 2004. "Distributive leakages of agricultural support: some empirical evidence," Agricultural Economics, Blackwell, vol. 30(1), pages 51-62, January.
    9. Perekhozhuk, Oleksandr & Chezhia, Giorgi & Glauben, Thomas, 2021. "Measuring Oligopsony Market Power in Kazakh Grain-Processing Industry: Converging Evidence from Two Structural Approaches," 2021 Conference, August 17-31, 2021, Virtual 315345, International Association of Agricultural Economists.

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